OFFSHORE - REASONS & BENEFITS

Introduction

As  terms  the words  offshore  business  and  offshore  company  have  no  precise  legal,
tax or general business meaning  –  the word offshore often means  nothing more  than
anywhere other  than  the place of physical  location of  the person using  the word  (i.e.
overseas). We  use  the words  offshore  business  and  offshore  company  as  terms,  of
definition  in connection with matters such as  the structuring of  international business
and family wealth management or tax planning.
The motivations for individuals and corporations to utilise offshore planning and offshore
companies, trusts and foundations include the desire to:
-  Reduce tax
-  Protect assets
-  Manage risk
-  Maintain privacy
-  Avoid bureaucracy
-  Reduce costs
-  Enhance assets

More  broadly,  the  benefits  of  going  offshore  and  utilising  offshore  companies,
 trusts,  partnerships and foundations for tax planning and offshore business include:

-  Free remittance of profits and capital
-  Access to top-rated debt history jurisdictions
-  Access to tax treaties
-  Security of property rights
-  Accessing low cost areas
-  Banking privacy
-  Availability of offshore experts
-  Access to foreign insurance and reinsurance
-  Enhanced privacy

-  Customs and duty exemptions
-  Currency convertibility
-  Government cooperation
-  Fair treatment
-  Territorial taxation on foreign income
-  Fewer restrictions
-  Sanctity of contracts
-  Foreign investment inducements
-  Tested legal systems
-  Higher yields and returns
-  The availability of sophisticated banking facilities
-  Reduced taxation
-  The search for political stability

The principal uses of offshore companies are:

-  Trading
-  Investing
-  Holding
-  Financing
-  Professional services or consultancy
-  Patent, royalty and copyright holding
-  Ship, yacht and aircraft management and planning
-  Personal and corporate tax planning


-  Very low or zero tax offshore companies incorporated in jurisdictions often  described as tax haven islands, such as the differing
types of offshore company that can be formed in offshore company formation centres such as the BVI, Belize or the Seychelles

OFFSHORE BENEFITS

-  Companies incorporated in jurisdictions which offer both offshore companies and
onshore companies and which may benefit from favourable tax regulation and / or
special offshore company regimes.
Companies  incorporated  in  the many  onshore  countries which  have  tax  regimes  are
by statute  tax advantageous  for specific  international purposes. The world of offshore
is more complex  than  the black-and-white  tax world  inhabited by  the media; offshore
business consists not only of tax havens but also of onshore high tax countries competing 5

These tax advantageous regulatio˚ns are used for a wide variety of tax planning business, such as:

-  Double tax treaty planning relating to dividends, interest and royalty payments
-  The establishment of holding, international headquarter treasury and finance operations
-  Specialist business, for example, leasing
-  Personal and family wealth management and tax planning

In  fact, almost all countries offer  tax  regulations of one kind or another  to encourage
inward investment.
International  tax  advisers  have  long  been  aware  of  the  opportunities which  exist  for
improving  overall  tax  efficiency  by  using  the  special  low  tax  regimes  offered  by  high
tax  countries  seeking  to  encourage  international  business.  However,  successful
implementation  of  such  structures  is  dependent  on  a  wide  variety  of  issues,  often
relating to matters such as anti-avoidance provisions, double tax avoidance, controlled
foreign  company  and management  and  control  tests  and provisions,  transfer pricing,
thin capitalisation, participation exemptions, capital gains tax and a myriad of other ever-
changing tax regulation. More recently, the weapons contained in the armoury of the tax
collectors have been supplemented by exchange of information treaties and provisions.
So  today  the  offshore  world  includes  the  expert  implementation  of  specific  tax
advantageous structures domiciled in high tax onshore countries as diverse as the UK,
Portugal, Singapore, Greece, Belgium, Austria, Spain, Switzerland, Luxembourg and the
Netherlands


What is an offshore company?

An  offshore  company  or  corporation  is  the  same  as  any  other  company  in  that  it  is
an  entity  recognised  by  law  as  a  separate  “entity”  with  limited  liability.  As  such  the
company has the option to sell shares, the right to sue and be sued, and has perpetual
existence.

Apart from the traditional offshore centres, many ‘onshore’ jurisdictions have corporate
structures  that  are  attractive  to  international  users.  UK  LLP,  US  LLC,  UK  Limited
Companies, Hong Kong Limited Companies, Singapore, Cyprus and Malta Companies
and LLPs and certain EU companies are all examples of domestic structures of particular
value for international tax planning purposes.
What makes an offshore company distinct from a domestic company?
Unlike  companies  incorporated  in  an  individual’s  or  a  corporation’s  home  country,  an
offshore company incorporated in an offshore centre may offer the owner:
-  Low or zero taxation in the country where the company is incorporated.
-  A greater degree of privacy.
-  Less bureaucracy.
-  Reduced compliance costs.
These features make offshore companies ideal structures for safeguarding an individual’s
privacy, protecting personal wealth, minimising tax and maximising a corporation’s profit. 7

ABOUT OFFSHORE: THE REASONS & BENEFITS

Why do tax havens and offshore financial centres offer low or zero tax?
The governments of many countries actively seek international investment and trade to
stimulate their own economies. The offshore industry has developed as a result of this
straightforward objective.
Many  of  these  countries  are  known  as  tax  havens.  Traditionally,  tax  havens  are  free
from  foreign exchange controls and have  introduced specific  legislation and corporate
structures,  designed  exclusively  for  international  business  and  foreign  investment. 
Where should I incorporate?
Most offshore jurisdictions are free from foreign exchange controls and have introduced
company legislation to cater for a diverse range of international business requirements.
It  is  important to select a  jurisdiction that  is well-suited to your specific corporate and
personal needs.
Is my privacy protected?

Whilst  we  respect  and  honour  the  confidentiality  of  our  corporate  clients,  we  are
committed to carry out a thorough due diligence of both our clients’ identities and the
nature of their business. Our clients must disclose to us both the reason for setting up
an offshore entity and the type of business the offshore entity is likely to conduct. We are
obliged to monitor and ensure that the activities of the offshore entity do not breach any
international regulations, and our clients are required to execute management agreements

This formal approach to due diligence benefits all parties.

Who will maintain the offshore company?
We have offices in most major financial centres and can undertake a client’s company
administration in accordance with corporate requirements. In addition, we can arrange
accounting,  audit  and  legal  services,  provide  local  management  and  assist  clients
generally with all administrative and operational work. 

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